A new study conducted by Ernst and Young proves conclusively that the President’s tax increase would be devastating to the economy and jobs.
The study finds that, if Congress misguidedly adopted President Obama’s plan to raise taxes on job creators by allowing the Bush-era tax policies to expire for incomes over $200,000 ($250,000 for married filers), the economy and jobs would suffer terribly:
- Output in the long run would fall by 1.3 percent, or $200 billion, in today’s economy;
- Employment in the long run would fall by 0.5 percent or, roughly 710,000 fewer jobs, in today’s economy;
- Capital stock and investment in the long run would fall by 1.4 percent and 2.4 percent, respectively; and
- Real after-tax wages would fall by 1.8 percent.
There are almost 13 million Americans out of work today. President Obama’s tax increase would needlessly add almost three-quarters of a million people to that already much too large number. Even those with jobs wouldn’t escape the pain of President Obama’s tax increase, as they would see their wages suffer.
The report validates Heritage’s argument that President Obama’s tax increase plan would badly hurt job creation because it would fall heaviest on the most successful businesses that employ workers and pay their taxes through the individual income tax (known as flow-through businesses). The study reports:
The concern over higher individual tax rates has also been a focus because of the prominent role played by flow-through businesses—S corporations, partnerships, limited liability companies, and sole proprietorships—in the US economy and that a large fraction of flow-through income is subject to the top two individual income tax rates. These businesses employ 54% of the private sector work force and pay 44% of federal business income taxes. The number of workers employed by large flow-through businesses is also significant: more than 20 million workers are employed by flow-through businesses with more than 100 employees. (Emphasis added.)
President Obama is fond of saying his tax increase wouldn’t impact 97 percent of small businesses. But those 97 percent of small businesses aren’t job creators. They range from people in their basements selling items on e-Bay to lawyers who practice out of their homes.
The businesses that would pay this tax increase are the businesses that hire millions of workers. Higher taxes on these vital job creators could force them to cut back on their existing workforce and would certainly cause them to slow hiring of new workers.
President Obama couches his argument for tax hikes on the rich in terms of fairness. But it would be anything but fair that millions of unemployed Americans desperate to go back to work would find it harder to land a job to provide for their families because of President Obama’s misguided class warfare.
There can be no doubt any more that President Obama’s Taxmageddon tax increase would devastate jobs. The Ernst and Young study should be the final nail in the coffin for his plan in Congress. It is time for Congress to do what’s right and stop all of Taxmageddon today.
why isn't the president publically addressing this grave concern he's causing? ask him what position he TAKES TO AVOID HIS INTENTIONAL MOVE! Why would he add sacrifice when he can respect to accept solutions like GET OUT OF OUR LIVES!!!!…we can govern our own without the government overhead and their irrational, unreasonable, undisciplined, unprecedented, unmerited costs!!
You should look into what E&Y said about Lehman Brothers. They couldn't seem to govern their own even within the law.
To "progressives" (like Obama) the "ends justify the means." This really is why (to the average person) it seems like the administration is making the wrong decisions.. If people loose their jobs as a result, so what.. It furthers the agenda to force people into dependence on Government… and all the government handouts like foodstamps, welfare.. In essence to destroy peoples lives puts them closer to their goals (not further away.)
I'm confused. What is it you care about? Taxes or deficits and debts? When Stimulus was passed and jobs were boosted enormously, all you wrote abotu was deficits and debts. Now, it seems you don't care about deficits and debt, just keeping taxbreaks and loophopes for the wealthiest Americans, like Mitt.
Why don't you think people should earn as much as they make? Why would Obama have tax breaks and loopholes for the wealthiest that the poorest of all people who gain wealth wouldn't have?
As far as want: Freedom, liberty and independence. Does that work for you?
Funny steve… more pushing class warfare on those who make our country prosperous.. Why not be "Fair" to everyone, and NOT tax one group more then annother? If I take more from you then anyone else wouldn't you have a problem with that?
Only an idiot would raise taxes at this time! What goof would it do? More money to waste more money for planned paremthood! These small business owners pay 40% of the tAXES. tHIS WOULD BRING IN 110 BILLION ENOUGHT TO OPERATE THE GOV'T FOR 5 DAYS!!!!Stop attacking the producers and start going after the crooks in washington, Stop spending!!!!!Stop taxing and stop spending/ not that confusing!!!!!!
The stimulus was a very expensive joke perpetrated against the taxpayers of this country. Nobody knows where all the money went. As Obama recently joked when asked about the stimulus "I guess they just were not as shovel ready as we expected". The very few jobs that were provided in Los Angeles by the stimulus had an estimated cost of $2,000,000 per job. In short, the stimulus was a colossal failure and a huge waste of taxpayer money, as was everything else this snake oil salesman has proposed. Obama is a feckless moron.
http://www.businessinsider.com/ernst-and-young-ma…
Funny to see the Adminstration referring to Ernst & Young's analysis as fraudulent, when all they probably did was assume Obama was lying about using the money for debt reduction. This is reasonable given his history of falsifications.
Where on Obama's web site does it say his plan is to pay down the deficit. poppycock! He has not done this in four years and he has NEVER campaigned on this issue. He has totally ignored his joint commissions finding on government waste etc. I think he must still be in that college haze he earlier claimed in his book.
People using the word taxmagedon shouldn't be taken serious because they them selves obviously don't take the issue serious enough to ignore hyperboles.
But to the more serious issue. Any tax increase do of course reduce the amount of jobs. So will also any form of reduction in spending. To keep borrowing money and run a deficit is of course a better way if one doesn't want to loose any job. But of course that only works as long as someone is willing to lend you the money.
What ever way is taken to reduce deficit p, if it is through tax increase or spending cuts will reduce the amount of job. The only question is which way will cause the least harm. As yet tax increase seems to be less harmful at lest in the short run.
You are a idiot!!!! Tax increases and spending never leads to prosperity unless of course you are a brain dead liberal!!!!! When republicans act like democrates they are always thrown out. Obama is no different!!!!!!!!!!!
The money taken in would last 8 weeks, and we would lose over 700,000 jobs. Historically every tax break has lead to more revenue not less, because tax breaks get more people into the work force so more revenue. Obama believes that everything emanates from government when most of the time government just interferes and makes thing harder, not easier. We need government to get out of the way and leave the job creators,(those who's businesses make over $250,000 a year, who Obama wants to tax out of existence)to get on with it. His Keynesian economics was discredited years ago..why do you thing that Europe is going bankrupt……….He couldn't manage a lemonade stand. By the way nobody ever got rich by making someone else poorer, we need to help people stop being dependent on Government for their paychecks.
Viktor you are wrong – there is another choice cut tax rates regulations, and cut down on the government. This historically has been proven to be the solution. What happens when that happens
is there will be a dramatic increase in revenue to the government and people's standard of living will go up. That has been done during the time of Coolidge, Kennedy, and Reagan, and even Clinton with his
cutting back of large government will work and we will get out of this mess.
By borrowing more and more money you dig yourself a deeper and deeper hole and you do not address the real problem Eventually you do have to pay the piper. Borrowing and printing money only puts off the economic pain and gives people a false sense of security. Eventually eitther my grandchildren or great grandchildren will be faced with this problem and it needs to end NOW. So suck it up put up with the pain and we will all be much better off for making that decision.
Are you people high? Obama is urging Congress to extend the Bush Era tax cuts! Use your mind and know the news. Is this some kind of joke site for Democrats?
yes he wants to extend, but NOT for ALL. Fin it's just more class warfare.. If your not extending for ALL then your playing CLASS WARFARE.. This is what makes it bad policy..
Keep up the great work Obama!
Wait a minute. Didn't Obama say that an unbiased, independent accountant say just the opposite? Oh, that's right, Obama's accountant just happens to be a big Obama supporter and contributor! Who should be believe, Obama or the truth.
The degree of ignorance of the average American citizen apropos economics is so profound that there is little hope of ever reversing the class envy currently destroying what use to be a free nation.I have asked hundreds of people who wrote Human Action or the Science of Praxeology with not one person (not one) could identify the author and I am not an economist by profession. Sad,sad,sad,sad!!!!! Obama is definelty in over his head and does not have the intellectual or moral acumen to lead anything let alone a country of over 300 million people.
Fin,
First, Obama is only extending the tax cuts for those making less than $200K ($250K for marrieds filing jointly). This is, clearly, a ploy to garner votes in the election based on his continued class warfare strategy. He believes that continuing to demonize the "evil rich" and perpetuating the charade that our fiscal problems are the result of the "1-percenters" [NOTE to OWS'ers: in world terms, *all* Americans are 1-percenters; quite whining] not paying their "fair share" [this in spite of the fact they currently pay about 40% of income taxes while earning about 20% of the income] will win him votes; sadly, due to the ignorance of the average voter, he's more right about that [the vote-garnering, that is], than he is wrong [which he is about the premise of his argument].
@Fin (part2)
Second, let's think for a minute about the arguments Democrats [and "progressives" in particular] continually make about the tax cuts. They say that the tax cuts were for the rich [not true; Bush lowered the rates for all and, in particular, reduced the lowest bracket from 15% to 10%, something Bill Clinton didn't do and Obama hasn't even contemplated; in fact, one of the first acts he signed upon taking office was an increase in the cigarette tax, a tax that disproportionately affects those make $30,000 or less since that group represents a disproportionately large percentage of the smoking population].
@Fin (part3)
They say the cuts have led to the huge deficits we now have and are the reason why federal tax revenues are at historically (for modern era) low levels [both untrue; the federal deficit prior to the Democrats gaining control of Congress in 2007 had fallen to about $161B and was still only about $465B prior to the full onslaught of the recession; federal revenues have fallen only about $500B as a result of the recession (and not because of any reduction in tax rates), which means the deficit should be less than $1T, if reduced revenues were to blame; they have been $1.5T+ for the past 3 years and are on target for the same this year]. They say the cuts didn't stimulate the economy nor create jobs [both not true; always hard to tie economic and job growth directly to any specific policy, but we did have higher rates of GDP growth coming out of the 2001 and 2003 recessions than we have today and we had 46 straight months of job growth under Bush, almost a full two years more than we've had under Obama's "stimulus" policies].
@Fin (part 4)
Now ask yourself, if all (or even most) of the "progressive", Democrat arguments about the Bush tax cuts are correct, why extend *any* of them? You certainly can't argue that the cuts have worked, but only because of the cuts made for those earning less than $200K; there's absolutely no way to guage economic impact by slicing and dicing the tax cuts in that fashion. And if they haven't worked yet (after a decade) and if they are the cause of all of the fiscal problems attributed to them, then they should be done away with once and for all — not retained for some, but not for others. Right?
@Fin (part 5)
The fact is, Obama only wants to retain the tax cuts on the lower end so he isn't seen as increasing taxes, especially in a close election year. He's already done that in subtler ways (cigarette tax, Obama"care" tax, etc.), but rolling back *all* of the Bush tax cuts would be a very clear, very apparent tax increase from which he could not hide (although we can be sure the mainstream media would give him plenty of cover). So, please take your own advice and "use *your* mind and know the (complete and accurate) news.
Wow. What bull pucky. . I spent my career in research. This research is all about underlying assumptions that are simply unrealistic and isolated. Don't fall for it.
Funny how no one is covering this story.
I find it hard to believe that ERNEST AND YOUNG is still in business. 60 Minutes report tonight made it very clear how UNAMERICAN ERNEST AND YOUNG IS you Greedy Bastards. Obama will win.